YPO’s recent survey of 1,700 business leaders identifies challenges, outlook.
As we enter 2022 and approach the third year of this shape-shifting pandemic, chief executives continue to navigate uncharted waters. Nevertheless, some companies are able to convert their obstacles into opportunities and grow. Others struggle against supply chain disruptions, labor shortages, inflation and high staff turnover.
How have the past two years of challenge affected the outlook and enthusiasm of the world’s business leaders?
To find out, the global leadership organization YPO surveyed 1,700 of its member CEOs. It discovered that the overwhelming majority are encouraged as the new year begins: 81 percent have a generally “favorable” outlook (“very favorable” for 34 percent and a cautious “somewhat favorable” for 47 percent).
The data also revealed some division between entrepreneurial companies and family business operators, with entrepreneurs being more confident about the future.
When parsing by industry sectors, CEOs in Product Services have a combined “very or somewhat favorable” 91 percent. Aviation and Food & Beverage sector CEOs seem the least optimistic.
The Clouds on the Horizon
Across the board the primary source of apprehension is inflation. Many are grappling with increased wage pressures amidst rising costs and declining revenue and profits. Those hardest hit are in the western United States. CEOs in Food & Beverage, Manufacturing and Construction appear most concerned about inflation.
The impact of supply chain disruptions is not expected to lessen soon. Only two percent of respondents think it will be resolved in the early months of this year, while most think it won’t be before the end of 2022. A healthy number see it persisting into 2023. Two other major pandemic-inspired challenges for CEOS are finding and retaining the right talent and complying with new government operating restrictions.
Brighter Days Ahead
However, it’s not all bad news. Things are looking up for many companies in the key areas of hiring and revenue growth. Thirty-seven percent of CEOs reported increased revenues of 20 percent in 2021, with only 17 percent reporting a decrease. Not surprisingly, given the source of the “optimism schism” referenced earlier, entrepreneurs show better revenue growth than family business operators.
The specific industry sectors that seem to be faring better in terms of revenue, with an average ten percent increase last year, are Media/Entertainment, Product Services, and Financial services. Those showing a ten percent decrease are Hospitality, Telecommunications, and Energy/Oil/Gas.
Across the board, however, hiring is picking up and there is major growth predicted. However, hiring challenges continue. Global labor shortages pose a serious threat, with many companies, especially in professional services, struggling to retain employees. Reasons for high turnover include changes in life goals and burnout.
CEOS who are already addressing these challenges state that they are stemming turnover and increasing retention in their workplaces by shifting to permanent flexible work schedules, remote work, and improved mental health benefits.
All in all, the YPO survey illuminates the state of mind of leaders across industries as they begin another year of uncertainty. There is a focus on improving work culture, engagement, and retention. They appear committed to staying on top of existing cash flow while exploring alternative streams.
To succeed in 2022, CEOs will have to mitigate the impact of inflation and navigate the challenge of ongoing supply chain issues. They must also take the time to understand the ever-evolving needs of customers and employees.